The Chicago Mercantile Exchange (CME) hosts the biggest Bitcoin Futures exchange in the world, and on the last Friday of every month, the futures contracts expire. This expiration often is associated with significant volatility and higher volumes, according to past data.

On 24 October, CME Bitcoin Futures contracts for the month of October expired. In the couple of days before the expiration, the price of Bitcoin dropped from USD 8,000 to as low as USD 7,300, followed by a USD 2,600 rally to $10,100 in the couple of days after the expiration.

This trend of a dip in Bitcoin’s price before the expiration followed by a rally after the expiration has been observed for six months in a row now, and could perhaps be a powerful tool for traders to predict market movements. That being said, sometimes the opposite situation happens around the expiration, where prices rise before the expiration and dip afterward, and some months there is no change around the time of the expiration.

It seems that the specific market behavior around the time of the expiration depends on the ratio of shorts to longs on the CME Bitcoin Futures exchange at the end of the month, although further research on this theory needs to be conducted.

 

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